Pioneer rival fails in court bid to stop BA launching `no frills' airline

BRITISH AIRWAYS was yesterday cleared to launch its no-frills European airline Go next week after the rival low-cost carrier easyJet failed in a High Court challenge.

Mr Justice Tuckey refused to grant easyJet an injunction which would have effectively stopped the launch of Go on the grounds that it was being illegally subsidised by the parent airline BA. But the judge turned down BA's bid to "strike out" a pending action by easyJet, which operates out of Luton airport, claiming that Go will be in breach of European Union competition laws.

The ruling means that, although Go can start flying its 143-seat Boeing 737s a week tomorrow with introductory return fares of pounds 100 to Rome, Milan and Copenhagen, it will still be open to challenge when easyJet's action comes to trial.

Barbara Cassini, the American chief executive of Go, said she was delighted by the ruling but disappointed the action had not been struck out. "This allows us to get on with the launch of the company without restrictions on where we can fly and how we can develop the business."

Go is expected to announce at least one further route in the next four weeks. The easyJet action, meanwhile, is expected to take six to 18 months to reach court. EasyJet's injunction claim was based on the allegation that BA, with its "bottomless pit" of funds, having guaranteed Go's leases on the eight aircraft it planned to fly, gave Go an unfair advantage over smaller competitors.

But the judge said to grant an injunction would be pointless. It would not stop the new operation and would serve only to cause considerable disruption. Go has advance bookings from 30,000 passengers.

In any event, the judge added, Go had not so far announced any plans to fly on easyJet's routes. There was nothing for easyJet to complain about, apart from a future threat of unfair competition.

Refusing to block easyJet's claim completely, the judge said the company did have an arguable case that BA was abusing its dominant position in Europe to the potential detriment of undistorted competition within the EU.

EasyJet - pioneers in the no-frills market which now includes Virgin, Debonair and Ryanair - accuses BA of "predatory behaviour" and failing to give "transparent" assurances or publish financial statements from which the amount of any subsidy to Go could be deduced.